American Funeral Financial, LLC v. UPS Supply Chain Solutions, Inc.
1:17-cv-05475
N.D. Ga.Jul 19, 2019Background
- Tanya Maness died in March 2017; her husband Joey Maness was a UPS employee covered by an ERISA-governed group life insurance plan issued by Prudential.
- Joey Maness offered to assign $22,474.75 of any life-insurance proceeds to American Funeral Financial (AFF) in exchange for AFF paying his wife's funeral.
- Before advancing funds, AFF called UPS to verify coverage and alleges UPS affirmatively represented that the policy covered Mrs. Maness and had sufficient benefits.
- The insurer later informed AFF there was no dependent coverage for Mrs. Maness and refused payment; AFF sued UPS in state court for negligence and misrepresentation based on UPS’s alleged “misverification.”
- UPS removed to federal court asserting ERISA §502(a) completely preempted AFF’s state-law claims; AFF moved to remand for lack of federal subject-matter jurisdiction.
- The District Court concluded AFF’s claims do not seek enforcement of plan benefits, rely on independent Georgia common-law duties, and are not completely preempted by ERISA; the case was remanded to state court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ERISA §502(a) completely preempts AFF’s state-law claims | AFF contends its negligence/misrepresentation claims arise from UPS’s independent duty under Georgia law, not from ERISA | UPS contends AFF, as assignee, effectively seeks plan benefits and thus the claim is removable under ERISA complete preemption | Held: No preemption — AFF does not seek to enforce plan benefits and accepts there was no coverage |
| Whether AFF could have sued under §502(a) (standing / colorable claim) | AFF argues it has no colorable ERISA benefits claim and sued only for reliance losses from UPS’s misverification | UPS argues the assignment gives AFF standing to pursue benefits under ERISA and thus §502(a) applies | Held: AFF lacks a colorable ERISA benefits claim and cannot invoke §502(a) despite assignment |
| Whether resolution requires interpretation of ERISA plan terms | AFF: determination of liability depends on Georgia negligence law, not plan terms | UPS: resolving the misrepresentation claim will require examining the plan and its coverage | Held: Court will not need to interpret plan terms to resolve AFF’s state-law claims |
| Whether an independent state-law duty supports AFF’s claims (Davila prong two) | AFF: Georgia common law imposes duties for negligent misrepresentation and negligence independent of ERISA | UPS: Misrepresentations about ERISA coverage necessarily arise under the plan (citing Gables) | Held: AFF’s claims rest on independent Georgia duties; Davila second prong fails |
Key Cases Cited
- Aetna Health Inc. v. Davila, 542 U.S. 200 (establishes two-part test for ERISA complete preemption)
- Beneficial Nat’l Bank v. Anderson, 539 U.S. 1 (describes when federal statute completely preempts state-law claims)
- Conn. State Dental Ass’n v. Anthem Health Plans, Inc., 591 F.3d 1337 (discusses ERISA preemption and standing issues)
- Gables Ins. Recovery, Inc. v. Blue Cross & Blue Shield of Fla., Inc., 813 F.3d 1333 (provider-assignee claim found completely preempted where plaintiff sought plan benefits)
- Adventure Outdoors, Inc. v. Bloomberg, 552 F.3d 1290 (removal burden and doubts resolved in favor of remand)
- Kemp v. Int’l Bus. Machs. Corp., 109 F.3d 708 (requirement that facts support removal and relief sought be available under preemptive statute)
- Caterpillar Inc. v. Williams, 482 U.S. 386 (explains complete preemption doctrine)
- Louisville & Nashville R.R. v. Mottley, 211 U.S. 149 (well-pleaded complaint rule for federal-question jurisdiction)